Chrysler Fiat Sale Delayed by U.S. Justice Ginsburg

[deminks]

http://www.bloomberg.com/apps/news?pid=20601209&sid=aRxvFzweBFuY

June 8 (Bloomberg) -- Chrysler LLC’s planned asset sale to a group led by Italy’s Fiat SpA was delayed by Justice Ruth Bader Ginsburg while the U.S. Supreme Court considers a request for a longer postponement that might scuttle the deal.

Moments after her order was issued, Fiat Chief Executive Officer Sergio Marchionne said in a telephone interview that the company will “never” walk away from the deal. The company previously set a June 15 deadline for completion.

A federal appeals court in New York last week allowed the sale, while putting its decision on hold until 4 p.m. today to let opponents including Indiana pension funds seek Supreme Court intervention.

(snip)

The pension funds sought a stay that would last until the full nine-member court decided whether to hear their appeal. The funds said in court papers they would suffer “irreparable harm” should the sale go forward.

(end snip)

[Statistical]

1. Good.

The deal violates bankruptcy law. Secured creditors being given less than unsecured creditors. I mean come on...

Before someone goes on a rant about hedge funds.

Pension funds are the #1 holders of secured bonds.

They trade a LOWER return for higher security in BK.
Secured Bondholders should be given "first dibs" in repayment under BK protection.

The bankruptcy deal lacks the rule of law.
I thought after the Shrub years we were going back to rule of law for everyone?

[jamieque]

2. Even though you are right...

You still are wrong...

What you fail to understand here is that if the deal falls through then no one gets a damn thing. So much for following the RULE OF LAW aka Bankruptcy law. In this particular case, following the rule of law would be a huge mistake. The pension funds are playing a game of risk by doing this and mark my words it won't end well. I am sorry for the pension holders but they will have to be happy with what they end up getting.

I know you will disagree with me so lets just agree to disagree and not bother with this issue.

[question everything]

3. I wondered about it, too

What do they hope to get? Fiat is the only one that showed interest. It could actually save some jobs. If this deal falls through, the next step is liquidation, which the plaintiffs won't get anything, but more people will lose their jobs, more cities will lose whatever tax base they are hoping to retain.

[Statistical]

4. Why would the deal HAVE TO fall through?

Fiat, US Govt, and UAW could take a smaller cut and allow (as required by bankruptcy law) the secured creditors a large equity stake in the new company.

The bondholders lawyer represents the pension fund.

The govt which (despite good intentions) provided unsecured financing.
The UAW which has unsecured obligations
Fiat WHICH ISN'T PROVIDING ONE CENT is more certainly an unsecured party.

All 3 receive full equity stakes in the "new Chrysler" relative to their existing obligations however under the law the only protected class, the secured creditor is asked to take cents on the dollar or nothing? Take it or leave it. Play ball or fuck the law we will bury you.

Come on. It smacks of chronyism.

Answer me this:
If Bush structured a deal such that his buddies in oil companies got the lions share of a deal and the secured bondholders owned by teachers unions got raped for cents on the $ would we still be saying "its the only way". Didn't we learn from the last 8 years what happens when we say:

"TIME IS URGENT. WE MUST ACT NOW. IGNORE THE LAW. WE MUST GET THE WMD/SELL THE COMPANY. NOW. NOW. NOW."

Right way and a wrong way. This is the wrong way. Law is the law. Either this administration is better than the last or it is not.

[Yupster]

5. I don't know why the government didn't just

buy out the bondholders for 60 cents on the dollar or something.

Especially at GM, the deal they gave the bondholders was way more than unfair. Just pay them off $ 15 billion and they'll give up their $ 27 billion happily and you can do what you want to with the company.

With a $ 1.8 trillion defecit, what's another $ 15 billion?

It's better than ripping up hundreds of years of bankruptcy law.